The U.S. government bailout of General Motors and Chrysler, and especially the disparate retirement treatment given to GM and Delphi workers, was alternatively lauded and disparaged during a politically-charged hearing before the House Tuesday.

“In a better world, the choice to intervene in GM and Chrysler would not have had to be made,” said Ron Bloom, former senior advisor to the Treasury secretary in testimony before the House Subcommittee on TARP, Financial Services and Bailouts of Public and Private Programs.

“But amid the worst economic crisis in a generation, the administration’s decisions avoided devastating liquidations and provided the American auto industry a new lease on life and a real chance to succeed,” Bloom added.

At the same time, Todd Zywicki, a law professor at George Mason University and a senior scholar at the school’s Mercatus Center, alleged that, “Much of the government’s political intervention in the bankruptcy cases appears to have been motivated to ben­efit the United Auto Workers rather than the companies themselves over U.S. taxpayers, who put billions of dollars at risk to fund the bailouts.”

The Mercatus Center is financially supported by the Koch brothers, well-known supporters of conservative causes.

Zywicki cited a recent paper he co-authored which contends that the “entire loss to the American taxpayer was not necessary to save the U.S. auto industry.”

Instead, he testified, “the entire loss is attributable to preferential treatment provided to the UAW in the bankruptcy cases beyond what they would have received as creditors and employees in a typical bankruptcy case.”

He said the paper he co-authored found that, in total, “this transfer from taxpay­ers to the UAW amounts to approximately $26.5 billion.”

“Had the UAW been treated the same as other similarly situated parties in these and other bankruptcies, there would have been no loss to the taxpayers,” Zywicki said his work had determined.

The hearing was held on, “The Administration’s Auto Bailouts and the Delphi Pension Decisions: Who Picked the Winners and Losers?”

A key area of concern was the termination of the six defined benefit plans sponsored by the Delphi Corporation, a key supplier and former GM subsidiary, and the provision of benefit protections to some Delphi employees but not others.

Harry Wilson, a former senior advisor to the Treasury secretary Henry Paulson when the Bush administration made the initial decision to aid GM and Chrysler in 2008, a policy continued by the Obama administration, voiced support for the decisions involving GM and Delphi at the hearing.

Wilson stated during his testimony that he is a “fiscal conservative,” and that he ran in 2010 under the Republican, Conservative and Independence Party nominee for New York State Comptroller and nearly unseated the Democratic incumbent.

He testified that absent government intervention, “the entire American automotive industry would have been at risk due to the intersection of chronic mismanagement and the worst financial crisis since the Great Depression.”

Wilson added, “It is only because of this unique confluence of events, this once-in-a-lifetime storm, that I, a staunch fiscal conservative, reluctantly came to accept that the only alternative, the ‘least bad’ option, was emergency financial support, the path initiated by the Bush Administration.”

He said, “Amid the worst financial crisis in the past 75 years, the actions of the Bush and Obama Administrations avoided devastating liquidations and provided the American auto industry a second chance – one that was necessary and that has been well utilized since that time.”

Regarding Delphi, Wilson said, as part of a broad plan of reorganization to resolve Delphi’s four-plus year old bankruptcy, GM management agreed to a series of measures, including providing necessary capital for Delphi to restructure and to honor the “top-up” agreements GM had made in 1999.

“Tragically, in order to effectuate this plan, pensions that were not governed by these contractual agreements, including pensions for salaried employees or other unionized employees, were not accorded additional consideration,” Wilson said.

Pertaining to Delphi, Matthew Feldman, who served as the Treasury Department auto team’s chief legal advisor from March to August 2009, said the decisions involving Delphi were made because “GM viewed a well-motivated workforce at its largest supplier as critical to ensuring an uninterrupted supply chain.”

He said “GM made the commercially reasonable and necessary decision to honor ‘top-up’ agreements it entered into in 1999 with the UAW and other unions when Delphi was spun off from GM.”

“Sadly, employees did not have top-up agreements with General Motors, and some of those employees will face a shortfall in their pension payments as the Pension Benefit Guaranty Corporation assumes responsibility for their pension plans,” he added.

He said that the Obama administration auto team “agreed that honoring the top-up agreements was a prudent business decision, and we believed that doing so would protect both GM and the American taxpayers’ collective investment in the company.”

“We supported GM’s decision, and I remain convinced today that it was the best course of action available at the time,” Friedman testified.

Feldman did voice concern for Delphi workers caught up in the decisions made to save GM.